Making that budget work

So many times we start out making a budget the wrong way. By not creating something that we can live by, we set ourselves up for failure. Budgeting failures aren't the sort of thing where you can just take a redo when you feel like it. Usually those failures lead to having to suffer even more to just get back to where you were going to start off anyway. Here are a few tips for setting that budget and making it a successful one.

Hourly Budgets: Time is money. We've heard it a thousand times. When you look at your budget as time, you are looking at much smaller numbers than $1000 a week or $4000 a month. Take someone that makes $52,000 a year, or $1000 a week. Break that same period down to 40 hours a week, or 170 a month (there's some months that have more than 4 weeks and some with less, so we're averaging here.) If you figure out that you bring home $850 of that $1000 and it takes you 40 hours to earn it, you make about $21 per hour, take home. By making an hour worth $21, you can now allot how you want to spend those 'hours' instead of the $21.

By making your $1000 rent payment 50 hours, that leaves 120 hours for the month. By making your car payment 15 hours, that leaves 105. By making your food budget 20 hours, that leaves 85. See how this gets easier to count? By the time you are done, you should be around 150 hours per month. That leaves a bit of a cushion incase anything dramatic happens to throw that budget out of whack.

Budget Weekly: Breaking down costs by the week, instead of the month, you deal with smaller numbers and don't have any inflated "1st check" vs. "2nd check" overages and underages. Nothing is worse than having $3000 in bills come out of one check and $50 come out of the second. By budgeting weekly, you can save the 2nd check funds for when you need them to help cover the weeks where the 1st check comes up short.

This is also a good time to figure out how much per week you want to start saving. Even if it is only $20 a week, over a year, that's $1000 that you are saving. Weekly budgeting is also great for shopping as you will find yourself being able to buy more fresh foods on a weekly basis and not wasting as much as you would shopping once a month or every other week.

80% Budget: So many people budget 100% of their income out just to make it stretch farther than it does. By following the 80% rule, you will find you have extra when you want it. Even if you have to back down to 90% to start, 80% is the magic number for being able to live on a cash basis. That way when the unexpected strikes, you have that 20% cushion to keep you from going too far in to next month's budget.

Budgeting isn't scary and it's not hard to do. It's a simple matter of breaking down costs in to controllable, fixed and luxury items. Fixed items are things like rent/house payment, insurance, car payments and other fixed expenses. Controllable expenses are things like credit cards, electric bills, cell phone bills, cable bills and other items that can vary month to month. Luxury items are things like going out to dinner or a movie, new clothes, shoes, coffee and maybe even a few of those controllable expenses like the cable bill can be overlapped into the luxury category.

Control the expenses you can and the ones you can't won't be so impossible.